July 28, 2015

Ed tech acquisitions and investments gain ground in 2015

The ed tech space is a burgeoning and quickly changing field of research, development and product sales.

On this blog, we've discussed high-profile mergers and acquisitions in the ed tech space, a burgeoning and quickly changing field of research, development and product sales. As education organizations like schools, tutoring operations and colleges become more dependent on technology for teaching and learning, a host of products and platforms have filled the market to meet their needs. This sector of the tech economy has been particularly favorable for startups, as young companies with great ideas can make themselves visible quite easily. 

In many cases, that elevated visibility leads to mergers and acquisitions. Companies with similar missions are often stronger in numbers and M&A provides the perfect mechanism for ed tech superpowers to form. Sometimes those deals happen regionally: Earlier this year, we discussed the acquisition of Boundless by Valore, two Boston-based ed tech companies. 

A growing market segment:

Generally, the investment in ed tech has grown exponentially in recent years. In the first half of 2015, ed tech investments have already matched the total dollar amount that was invested in 2014, according to a study by Ambient Insight. At $2.42 billion, it's not a figure that's easy to overlook in the grand scheme of tech M&A. 

"Increasingly popular and cost-effective ed tech options like digital textbooks and open source learning management systems have impacted bottom lines and made innovation a necessity," writes Roger Riddell of Education Dive. "As is the case in many other industries, the quickest way to innovate and regain lost ground (or expand your existing foothold) is often to buy a younger, smaller company."

Ambient Insight's other finding is that the major money investors have spent on ed tech has supported public-facing applications, rather than platforms for institutions. The trend would show that many ed tech consumers have elected to take education into their own hands, presenting a new and growing marketplace for self-education.

The latest deal in ed tech:

This trend couldn't be more evident in the M&A activity posted this week. It was recently announced that popular educational resource website Noodle will acquire Allclasses.com, a website that offers a wide variety of classes to students. These range from yoga instruction to language lessons and cooking guides. Per the findings of Ambient Insight, Noodle leadership says it was seeking a way to give customers more control over educational technology. 

"At Noodle, we are aggressively trying to change the way families approach their education, helping them cut through the noise to find the right fit for them," said Noodle founder and CEO John Katzman in a statement. "The addition of Allclasses means students, parents, and professionals who come to Noodle will easily be able to search, find, and take the best online and offline local classes for them."

Many ed tech companies have found success by customizing approaches to learning. Whether that means pioneering flexible teaching platforms to providing a host of multimedia for independent learners, the sector is growing. 

If your company would like to secure a tech M&A deal to meet its growth objectives, contact us today to learn about the benefit of working with a M&A advisor. Our experts can help your enterprise pursue, negotiate and sign a lucrative deal that will take your tech startup to the next level.